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Selecting the Wrong Target

Marcel Gemme By Marcel Gemme | Last Updated: 19 September 2023
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In the difficult times of today’s COVID-19 pandemic, substance abuse is at an all-time high. Over 81,000 drug overdose deaths have occurred in the United States in the 12-month period ending May 2020, the highest number of overdose deaths ever recorded in a 12-month period. This shows the impact that environmental stressors can have on people. But what has made it particularly deadly is the lack of accessible treatment during these times.

The virus initially caused a shock that left many substance abuse treatment facilities empty. Though they weren’t forced to shut their doors because of COVID, many facilities couldn’t stay afloat amid the crisis and ended up doing so anyway. With financial problems and staffing problems, some are concerned that this already shaky industry can’t withstand further blows. Since treatment centers are already limited in how they can obtain new clients, more good facilities may be forced to close their doors at a time when people need help the most.

Those familiar with the substance abuse industry are familiar with laws that prohibit treatment centers from paying for referrals. Many feel this is a triumph and are ecstatic that our government is finally doing something to curb the “Rehab Racket” that’s been going on in our country. But if you take a closer look, this law may not be as helpful as some may think. And, who actually benefits from it may surprise you.

At the heart of the rehab racket was insurance. And it all began with the notorious “Florida Shuffle”, a practice that was so common it earned its own nickname. But first, some backstory.

Beginning in 2010, the Affordable Care Act allowed adult children to be covered by their parent’s policy until the age of 26. In addition, it required insurance companies to provide coverage for substance abuse treatment, something hardly any policies previously covered. This opened a massive revenue stream for treatment providers in the rehab industry who previously had to survive by mostly charging cash at rates that few could afford.

With this new revenue stream came an opportunity for unethical providers and predators to capitalize. Patients with insurance policies began being viewed as walking dollar signs. They’d be brought in and kicked to the curb whenever the insurance quit paying. It was so profitable that some treatment centers began offering huge compensations for referrals of clients who had good insurance policies.

Keep in mind, prior to the Affordable Care Act, referral compensation had already been going on for a long time. So few people could afford treatment, that centers often battled with one another over a small client pool to keep their doors open. The cost of housing, feeding, and treating a high-risk population for weeks at a time takes a lot of money. But the referral fees were smaller then and centered around private treatment centers that couldn’t afford major marketing expenses. Now people were entering treatment in droves with new insurance policies in hand. And some people became greedy.

Enter the Florida Shuffle. Rehab centers in Florida were the first to realize they could make loads of money now working together, rather than against each other. You see, insurance companies deem treatment services as necessary so long as the patient qualifies based on their symptoms. So, as a patient’s policy stopped paying because they were showing improvement, they no longer qualified for that level of care. In the treatment industry, there are multiple levels of care starting with residential, all the way down to outpatient. A patient would start at a residential facility, then be transferred to different Florida facility that provided the next step-down level of care. Each facility along the way could profit from the one patient’s policy, so they started paying each other for patients as they were shuffled from center to center.

But then, a new wrinkle developed. If you discharged a patient and they then relapsed, the insurance company would start the payment cycle all over again when they were re-admitted. But insurance has very black and white parameters, including that they won’t cover treatment unless the patient comes in testing positive for drug use on their urinalysis. And this is where things got grimy. Patients who were kicked out once their insurance stopped covering were starting to get “incentives” like cash to come back, so long as they tested positive again upon admission. Predators were hanging around treatment centers and even entering them under the guise of “patients” with the goal in mind of recruiting new prospects. These headhunters, often previous graduates of rehab centers themselves, would get paid per “body” to whisk patients away to a different facility, keeping in mind they had to relapse before they got there. And they were getting paid so much they could offer other incentives that made it profitable to be a patient participating in the Florida Shuffle.

This all became so glaringly unethical, that lawmakers stepped in. Their answer was to make it illegal to pay anyone for referrals. Insurance companies also tightened up drastically, making stricter guidelines for authorizing coverage and paying much less for services. They were losing too much money. Many hailed this as a victory, hoping that it would curb the abuse. Unfortunately, it hasn’t, and the only real result is that it’s become harder for people who really need it to get treatment yet again.

Sure, if you get caught “body brokering” you can face heavy penalties such as fines and potential license removal. But you have to get caught. Making a law does nothing to increase the policing and monitoring of lawbreakers. Imagine a society without police. We all know what’s illegal, but who’s watching? So, what’s occurred is that the more ethical treatment providers have stopped paying for referrals, but the greedy ones continued doing it. With competition like that, it’s been very hard for some of the best programs to survive. In effect, the restriction has given rise to more and more bad rehabs.

Before you misinterpret the above, let’s look at what ethical referral compensation could look like. If you’re a rehab, you must market. It sounds calloused; the idea of trying to get people suffering to pay you. But all healthcare providers do this. Otherwise, no one even knows they exist. Pamphlets, brochures, commercials, and listings all cost money. This goes all the way down to the insurance companies. We’ve all heard the term “in-network” and know that those specific doctors and treatment providers are the only ones our policy will cover. But have you ever wondered how this works? These providers have contracts with the insurance company where they are referred business by them. The compensation is that they charge the insurance company less for services in exchange for the benefit of being in-network. This benefits the insurance company in multiple ways, as by offering a broad network of covered providers, people are more likely to buy their policy. So, they make lots of money and lose very little. The providers may not make as much per patient, but they make far more overall through patient referrals.

Okay, so you MUST market in healthcare. You can’t just open a rehab center and expect people to somehow find it. Well, marketing is expensive. Large hospitals and medical groups pool resources to afford marketing. Most pay marketing agencies to advertise for them. After all, they are a business at the end of the day. Rehabs are no different. But under this new law, rehabs essentially must do their own marketing internally, and reach prospective clients directly. No outside agency can refer prospective clients to them and receive any kind of compensation.

Prior to this law, there were people who made their entire career off referring people to rehabs. And they did so ethically. They usually had well-marketed websites and people who were looking for treatment would land on them and call up, looking for help. They would be referred to a well-reputed treatment program, and the company making the referral would get a fee from the treatment center for reaching someone that the treatment center, with its own resources, couldn’t. This is how many patients got into treatment, and many lives were saved.

But public outcry has asserted that this is “profiting from others’ misery”. Yet, these same people see nothing wrong with shelling out thousands of dollars to surgeons, doctors, and psychiatrists for similar services. Not to mention, paying top dollar to insurance companies who boast the best networks. The healthcare field is the epitome of profiting from pain, so the idea that it’s not noble to charge for one’s work or services because the person paying is suffering is a complete fallacy.

It takes work and money to provide medical and substance abuse services, particularly good ones. It’s a nice idea that it should all be free, but the funding has to come from somewhere, and right now it’s not coming from our government. Like it or not, the industry creates jobs, saves lives, and its end goal is to help people. You can’t say that about many other industries. Limiting its workers to a volunteer-only basis would cause a complete collapse. Everyone must survive, and the people doing this difficult job deserve to also.

This doesn’t defend things like the Florida Shuffle. In all industries, there are a few who seek to do evil at the expense of others. It’s sad and should be stopped. But taking measures that make services less accessible, cost jobs, and ultimately hurt the patients and good providers has got to stop, too. Though well-intended, the legislation to make the industry more ethical has essentially failed.

You see it when a family who pays hundreds of dollars per month for insurance coverage can’t get help from their insurance company in covering treatment for their child. You see it when good, private treatment centers go out of business because they can’t compete and keep their doors open. And you really see it when the Florida Shuffle pops up in California and other states simply because there’s no real monitoring taking place.

And what about the insurance companies? At some point, they must be held accountable also. The Affordable Care Act opened this door. Many people who couldn’t afford insurance before were forced to get it or suffer a tax penalty. This effectively drove business to insurance companies, whose rigid rules and black and white thinking have allowed such atrocities to take place. Most major insurance companies saw unprecedented financial growth over the last decade since this shift. Their own internal monitoring systems could’ve easily prevented the Florida Shuffle by catching onto the trend and stopping it before it grew to epic proportions. Instead, they’ve responded by simply becoming more rigid and limiting the people who really need help from getting it.

In an interview with Joseph Kertis, a former clinical director for a residential substance abuse treatment, he explained how insurance providers don’t always have their client’s best interests at heart. He states that during his tenure at an inpatient facility in Louisiana, it was common to see patients denied coverage for arbitrary reasons.

In one instance, a young man had been arrested for drug possession and was set to be released from jail soon. Kertis reports that he’d never received treatment for his addiction before and was in desperate need. His mother’s fear was that should he be released without any rehabilitation for substance abuse, he’d likely relapse. She was right, and he even agreed and was willing to go directly from jail to treatment. Kertis worked to help the woman and her son get preauthorization for treatment prior to his release, and he was denied. The reason given was that he was clean and would need to have a positive drug test to be covered.

Despite being addicted to heroin, a drug that is notorious for killing people who relapse after treatment and jail (due to the phenomenon of lowered tolerance,) his insurance company said that he’d need to relapse between jail and treatment to qualify and receive coverage. Otherwise, the family would be responsible for paying entirely out of pocket if they wanted to prevent relapse and save their son’s life. This was a major insurance company that was content to collect their client’s premium but unwilling to cover when it was needed most.

As with any field, there are no guarantees that all involved are looking to do good. Witness the overprescribing of Oxycontin, for example. But, with greater monitoring and sensible judgment, we ought to be able to crack down on those unethical individuals without making it harder to help the people who need it. When at the end of the day the rich get richer and those who are struggling still suffer, we can see that we missed the mark again. And in the field of addiction, during these times, we really need a bullseye.




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Marcel Gemme has been helping people struggling with addiction for over 19 years. He first started as an intake counselor for a drug rehabilitation center in 2000. During his 5 years as an intake counselor, he helped many addicts get the treatment they needed. He also dealt with the families and friends of those people; he saw first-hand how much strain addiction puts on a family and how it can tear relationships apart. With drug and alcohol problems constantly on the rise in the United States and Canada, he decided to use the Internet as a way to educate and help many more people in both those countries. This was 15 years ago. Since then, Marcel has built two of the largest websites in the U.S. and Canada which reach and help millions of people each year. He is an author and a leader in the field of drug and alcohol addiction. His main focus is threefold: education, prevention and rehabilitation. To this day, he still strives to be at the forefront of technology in order to help more and more people. He is a Licensed Drug and Alcohol Treatment Specialist graduate with Honours of Stratford Career Institute. Marcel has also received a certificate from Harvard for completing a course entitled The Opioid Crisis in America and a certificate from The University of Adelaide for completing a course entitled AddictionX: Managing Addiction: A Framework for Succesful Treatment.